Daily Archives: January 17, 2007

Cramer Interviews GlobalSantaFe

Cramer said on MAD MONEY that oil service names are acting horribly and acting like oil is heading much much lower.

He interviewed Global SantaFe (GSF), and the CEO said this is unusual, particularly since they are sitting on $11 Billion in backlog and that is close to their market cap.  This level of backlog is higher than any others, but no one is exiting contracts or indicating they intend to exit contracts.  This is still a very profitable level for oil companies and nowhere close to the threshold where they can’t make lots of money.  They try to reinvest in the business with all the cash they have accumulated and that they bring in, but what they can’t then they will return to shareholders via buybacks and dividends and if that doesn’t do it they will look for other wars.

Cramer said he also likes Transocean (RIG) (he owns it) as worth more than it is selling for, but he says you have to be Very selective in the sector.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 6:58 pm in Cramer, Oil & Gas

Cramer’s Tech Exceptions

In Cramer’s earlier story, he reviewed how tech as a group is done for some time.  Here is a link to the prior list of negative stocks and negative sectors.

Microsoft’s (MSFT) won’t save the day for all the other sectors, but he likes that one.  He said he is exiting when tech is up 2.6% more than the market.  He says you don’t have to think being a lemming is dumb sometimes.

There are a few that he thinks can weather the storm.  His 5 names are:
Cisco Systems (CSCO), Apple (AAPL),  Microsoft (MSFT), Hewlett-Packard (HPQ) and Google (GOOG).

Cramer said Cisco Systems (CSCO) murdered the Junipers and others.  Cramer thinks the recent downgrades just mitigated some of the calendar risk.  That was also one of his top growth plays 2-weeks ago.

Apple (AAPL) is still his #2 growth stock of the year and he is sticking with it.  The guidance is just artificially low for the quarter and he thinks this goes higher even with it down in after-hours.

Microsoft (MSFT) is too powerful to be capped.  The Vista is going to win and MSFT under $28 is a gift (although it is around $31 now).  He thinks even though it may sell off after the Vista release, you may want to rebuy it.

H-P (HPQ) is the best player in PCs according to him that will benefit from Vista.

Google (GOOG) is a product winner and he thinks it goes higher.  He said last week that it would go to $513 by today, but we are at $497; that’s a gift according to him.  In the very recent past he noted that GOOG was at a $500.00 wait before it was going to $600.00.

He also likes Level 3 Communications (LVLT), but that wasn’t one of his top 5 holding stocks he noted.  That is his #1 speculative play for 2007 from 2 weeks ago if you recall.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 6:36 pm in Cramer, Semiconductor, Software, Technology Companies, Telecom

Cramer Really Dumps Tech; Except a Few

Cramer on tonight’s MAD MONEY on CNBC discussed the sell-off in tech, but said you can’t just sell it all.  Cramer said it’s time to pull the plug on tech until further notice UNLESS they pass the Cramer test.  He said the calendar dictates this, and the best way to trade tech is by the calendar and it is rarely wrong.  This was something I noted earlier today where he has changed his stance on tech.

He says Sell in January and Buy in August and hold until Mid-December to mid-January.
There are parts that MUST be given the boot, but he has 5 techs he still blesses.  He said unload storage, semi’s, handhelds, software, and cell phones.  There is also more than just the calendar, the competition is killing them.  He said you can’t touch Intel (INTC) or AMD (AMD) ahead of the Vista launch because of a price war. 

He said you have to sell National Semi (NSM), RF Micro (RFMD), and Micron (MU).  The only way to win in cell phones is by price, but that’s a loser trade so he is negative on Nokia (NOK), Ericsson (ERIC), and Motorola (MOT).  SAP (SAP) blew up, Rackable (RACK) blew up, sell EMC (EMC), Brocade (BRCD).  Research-in-Motion (RIMM) is also a sell.

He still owns Marvell Tech (MRVL) and MRV Communications (MRVC).  He will be addressing 5 tech stocks he wants to hold for the next few months.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 6:18 pm in Cramer, Semiconductor, Software, Technology Companies, Telecom

Apple Beats Across The Board, Too Bad It’s Not Enough

Apple (AAPL) lost ground at the end of regular trading, down over 2% to just above $95.. Even with conservative guidance for the next quarter, results were overwhelmingly positive and the stock rose over 4% to top $99 after hours. Then the market started to think about guidance, and the stock reversed field moving well below $94.

Apple sold 21 million iPods, beating expectations of about 16.3 million. Revenue hit $7.12 billion, and EPS of $1.14. Mac sales were the only disappointment hitting 1.6 million units, slightly below Wall St.’s dreams.

The company’s profit was $1 billion, up 78% over the same quarter last year.

Apple followed its tradition of conservative guidance. It forecast the next quarter’s results to have revenue of $4.8 billion to $4.9 billion. Reuters’ estimate is $5.24 billion. The company’s EPS forecast for the next quarter is $.54 to $.56 compared to the Reuters’ estimate of $.60.

The Banc of America analyst, Keith Bachman, is a 5-star rated analyst with Starmine and he recently reiterated his Buy rating and lifted his $100 target to $110 after the new products were unveiled.  The street was looking for earnings of $0.78, but the Starmine SmartEstimate(R) was  $0.81.  The higher-end of the range was $0.83.  Revenue expectations from Wall Street were roughly $6.43 Billion.  The company only guided $0.70 to $0.73 and $6.0 to $6.2 Billion implied with its last earnings when it gave guidance.

Apple’s chart shows an overbought reading, but that is frequently the case and almost every sell-off in Apple shares has been met with a buying flurry and a surge to newer and higher all-time highs.  On an adjusted basis, Apple is up more than TENFOLD since October 2001 when Windows XP was released and when the economy was choking on the impact from 9/11.  Shares are also up huge from last earnings when its shares went out at $74.29 ahead of earnings.

The real impact from new products is actually two and three quarters away, so there is a lot of calendar between now and more forward guidance.  Any supply hiccups or any real changes in the component markets could speed up or delay the launches, and many research firms have to try factoring that variable into estimates.  Yesterday, options traders appear braced for a move of up to $4.00 in either direction; but that "expectation from options pricing" should compress rapidly as the results are out and as the time value left on the options will erode until Friday’s options expiration date.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 17, 2007 – 4:55 pm in Consumer Electronics

Washington Mutual Exceeds Estimates on Unit Sale

Washington Mutual (WM-NYSE) posted earnings of $1.10 EPS, but that number included a large gain of $415 million and charges of $100 million.  Earnings from operations were expected to be $0.88 EPS, so thi sin’t exactly an apples to apples comparison.

The company used the proceeds from the sale of WM-Advisors and it repurchased $2.7 Billion in stock on an accelerated plan on January 3, 2007.  It has laso hiked its dividend from $0.53 to $0.54.  Shares are down 1.1% in after-hours at $43.25, and that is after closing down 0.75% at $43.73 in regular trading hours.  Its 52-week trading range is pretty tight at $41.03 to $47.01, and if WM ever sees any severe weakness it has been thought of as a potential takeout candidate from one of the larger money center banks or potentially by a foreign lender.

The bank posted return on common equity of 16%, had net interest margin of 2.58%, and had 0.8% in non-performing assets.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 4:50 pm in Banking, Earnings, Financial Stocks

Lam Research Posts Gains But React To No Guidance and Lower Margins

Lam Research (LRCX) beat earnings on the surface, but it appears that the easy trade is to harp on margins after seeing Intel last night and today.

Diluted EPS: $1.15
Revenue: $633.4 million
Estimates were $1.11 EPS & about $621 million in revenues.

Gross margin for the quarter was $322.9 million, or 51.0 percent, compared to gross margin of $313.2 million, or 51.8 percent, for the September 2006 quarter.  New orders recorded in backlog increased 7 percent sequentially to $779 million.  Deferred revenue and deferred profit balances were $284.4 million and $176.8 million; unshipped orders in backlog were approximately $719 million.

"In 2007 we will seek to continue achieving the benefits of our business model and expand upon the momentum in our core etch businesses. We are making excellent progress in our activities associated with our expansion into markets adjacent to etch and are confident that our new products will deliver the type of best-in-class, yield enhancing results that our customers have come to expect from Lam Research," said Steve Newberry, president & CEO of Lam. 

So it looks like we have no formal guidance out of the company and that may keep a lid on after-hours trading activity until the conference call has concluded.  Shares of LRCX have traded up as much as 1% to $54.45 in after-hours, and that is after closing up 1.6% at $54.13 in normal trading.  Shares look down marginally down under $54.00, so right now it seems the easy trade is to harp on margins.  After seeing the reaction on Intel’s margins from last night it is always possible that the street will focus on that 0.8% sequential decline, but who knows until the guidance is out.

The larger companies in chip equipment and chip testing are Kla-Tencor (KLAC), Applied Materials (AMAT), and Novellus (NVLS).  LRCX has a $36.66 to $57.05 trading range over the last 52-weeks.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 4:27 pm in Earnings, Semiconductor, Technology Companies

Entrenched Corporate Leader: Fred Smith of FedEx

Fred Smith, Founder, Chairman, CEO
FedEx (FDX-NYSE)

Maybe a CEO can be more tied to a company than Fred Smith of FedEx, but you have to go to companies that are named after founders.  Mr. Smith is roughly 60 years old and still holds roughly 7% of the stock without getting exact.  He is the founder and it could have just as easily been called MailSmith or PackSmith.

His pay is roughly $4.6 million, but he could seek to raise that tenfold and it is unlikely that anyone could stop him.  He won’t do that, but that is an example of leadership.  He may remain on for another 15 years, 2 years, who knows.

The company has made strategic roll-ups when it saw fit, and probably will continue.  He has proven that the Kinko’s purchase was worth the outlay, and that wasn’t an easy sell to everyone at the time.   Shares are up roughly fivefold in the last 10-years.  He has weathered earnings warnings, a growing UPS competitor, slower economies, net misses, punishing fuel costs, labor negotiations, and even unfortunate plane crashed.  Unfortunately that happens in every aspect of the airline or airfreight business if you are around long enough, and he has been there through and through.  Investors either have faith in him or they need to learn it, because they will have him in charge as long as he can or wants to be there.  And history has shown that isn’t a bad thing at all.

FDX is around $111.00, and its 52-week trading range is $96.50 to $120.01.

As a reminder, here is the link back to the introduction of this CEO segment.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 4:06 pm in Uncategorized

Cramer Talks Financials

On today’s STOP TRADING segment on CNBC, Jim Cramer talked financials.

JPMorgan (JPM) and Wells Fargo (WFC) are Cramer’s two bank buys in America.  Cramer said that Bank of America (BAC) could do Dilutive acquisitions; but Dimon at JPM is firing on all cylinders.  Cramer says you can Sell Bank of America (BAC) and Citigroup (C).

On Northern Trust (NTRS), with it having been down 5%, Cramer thinks any time this has been at a discount you should have been buying.  He thinks it is very well run and you need to buy it.  On Mastercard (MA), Cramer thinks it will have another earnings surprise and it may murder the shorts.

Cramer said that Lennar’s (LEN) guidance today (actually goals) is way too bullish for him to believe.

Cramer then said he has a big call tonight on MAD MONEY.

As noted in an earlier post, Cramer has changed his stance on tech as a group.  Yes there are selective winners to him, but the calendar is going to work against the group as a whole.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 2:50 pm in Banking, Cramer, Financial Stocks

FCC’s Short Circuit On XM & Sirius Merger

Kevin Martin, Chairman of the FCC, has said that FCC rules would prohibit a marger in satellite radio.  Could this be changed?  Sure, with some serious lobbying and petitioning, long-term concessions, and likely a costly uphill battle.  Satellite radio is not deemed a critical media support mechanism out there yet, so this makes little sense that the FCC would be out there crashing any merger hopes. 

If the head of the organization is saying this publicly it would make sense that he is trying to draw the line in the sand to what were probably direct discussions that have been brought to the FCC by either XM or by Sirius.  Blocking this would-be merger before it is even announced makes little sense when you consider how much of the old Ma-Bell that was broken up in the 1980’s has been put back together on their watch.  Either way, this is taking any merger hopes away from the satellite radio investors.

Here is the Daily Digest from today for the FCC.

All I can think of is Doug’s article from this morning questioning if these companies are worth less than their share prices.  This has much of the supporting data that has built up to today’s news.

The Wall Street Journal (subscription required) has already slammed this today, and there have been as many prelude comments to this speculated merger as you can count.  Even Karmazin admitted last year there would be FCC problems on this long ago.  But if these companies can’t band together they are going to have to do quite a bit more to keep those debt and past operating losses from dragging them down.

You know they aren’t, but this would sure make you wonder if the FCC heads shorted the stocks today if you were a conspiracy theorist.  Sirius (SIRI) is down 6% at $3.90 and XM (XMSR) is down almost 9% at $15.62.  Either way, this story is getting more coverage than one would have imagined and it is getting very long in the tooth.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 2:36 pm in Mergers and Buy Outs, Regulation, Satellite

Cramer Has Changed His Stance on Tech

The body language was coming clearer for a change of heart in tech from Cramer on his videos and on his shows, but when you watch today’s "Wall Street Confidential" on TheStreet.com you will not have any doubt that he is no longer behind tech as a whole.

Rackable (RACK) is seasonality of tech and it says you have to make some sells in tech stocks now without waiting for the next one.  Cramer said he doesn’t know why people were buying Intel (INTC) and he didn’t want to be there ahead of the numbers.  Cramer says it cannot be owned right now.

Cramer thinks tech can still outperform in 2007, but this part of the annual calendar is where technology starts to fall off.  He still likes H-P (HPQ).  He thinks on Cisco (CSCO) that if the stock pulls back to $25 or $26 on downgrades then you can look at it.

Cramer said he doesn’t care on Apple (AAPL) about the quarter: If it’s down then it’s a gift and if not then you stay owning it.  Cramer thinks Vista is showing that it won’t carry all the tech groups like it seemed.  Lighten up on EMC (EMC).

The bull market is still in financials and JPMorgan (JPM) was a buy.  Capital One (COF) is one of the most hated names around right now.

You can take profits on airline stocks and then you can buy them again.  He still likes UPS (UPS) and transports on pullbacks.

Cramer has more picks on his video segment, but this sure sounds he has definitely changed his stance on tech as an entire group.  Now he’s getting much more selective in the sector.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 1:59 pm in Cramer, Earnings, Technology Companies

Entrenched Corporate Leader: John Chambers of Cisco

John Chambers, Chairman & CEO
Cisco Systems (CSCO-NASDAQ)

In the world of networking and technology, John Chambers of Cisco Systems may be the most entrenched CEO there is.  He’s there as long as he wants to be.

He is not yet 60 years old, looks far younger, and is down to earth enough publicly in the media to the point that he asks people to call him John.  He is very active in the acquisition determination process at the company as you would expect, but they have rolled up enough companies that some could argue they are a technology acquisition holding company and post-incubator.  With Linksys and Scientific-Atlanta the company has really changed from a mere backbone equipment provider into a company that (regardless of how you connect to the internet) literally provides the connectivity equipment and solutions from the point that data starts to leave Servers all the way up to the last wire (or equivalent) to your computer (or web access device). His holdings in the company are not even 1%, but he is the de facto face person and spokesperson for the company.

The company has been able to grow its market share and not lose it when they had reached the point that others could start winning it away.  It didn’t happen.  Juniper, Huawei, Nortel, Lucent, and so on were never able to steal away what could have been stolen from 2000 to 2005.  It isn’t even his fault that the stock used to be more than 200% higher than the current price, after all he didn’t make up what we now know was a stupid stock market from 1999 to 2000.  There were some times in 2001 to 2003 and then again in 2005 that shareholders might have started thinking that fresh blood was what the company needed at the top, but as it looks now that is all in the past.  It would take a critical sweeping series of errors for him to lose his position.  Any old shareholder cries for new leadership are long gone.

I don’t know what would happen to the stock in exact percentage terms if we walked into our offices and saw a headline “John Chambers Announces Resignation.”  Obviously the stock would be down, and it is only arguable by how much.  As long as that wasn’t part of a scandal he would be swept up for a key advisory position or even much higher in the world. 

He’s there as long as he wants to be.

As a reminder, here is the link back to the introduction of this CEO segment.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 1:44 pm in Cramer, Management Change, Technology Companies

Entrenched Corporate Leader: Barry Diller

Barry Diller; Chairman & CEO
(IACI-NASDAQ) IAC/Interactive’s

A lot of stink was made over Barry Diller’s pay package last year when he reeled in close to $300 million.  Yes this is beyond a lot of money, even if the bulk of it came from options and there is no refuting that it might be too much.  But shareholders have been rewarded and the alignment inside the company is behind him all the way.  After all, he is probably directly responsible for each unit head being where they are.  Diller has a young team of managers under him, but they are not trying to sneak him out so one of them can fight for the top position and the losers can leave.  If that is in the cards, then it is a secret on the street.

Diller could be described as a three-headed hydra, but one that Wall Street likes.  He is part head hunter and talent manager, part face man, and part visionary.  Imagine rolling up the USA Networks with online and off-line properties like Expedia, Travelocity, Ask Jeeves, LendingTree, Ticketmaster, and many more.  He even acquired Expedia and then rolled it back out as its own public stock again (with himself in charge and his own picked team in place).  The company is a conglomerate and determining the earnings for the whole organization can be like a blind Eli Whitney running a cotton gin. It doesn’t matter that his ownership is less than it used to be.

Diller is roughly 65 years old, and acts like he has the energy and vision of someone 45.  How do you not love a guy that could convince Wall Street that even if they can maintain 2% of Internet Search market share that it can end up being a huge win?  Investors can bring up pay packages until the end of time, but Diller is no Nardelli.  If any real traction calling for a Diller-reform were to start, he’d be able to round up the institutional support in a heartbeat.  Try calculating how much his roll-ups and spin-offs have generated in investment banking fees on Wall Street.  You don’t have to like Diller, but you might as well accept him.  He’s there as long as he wants to be.

IAC/Interactive (IACI) $38.40; 52-week trading range $23.54 to $38.73.

As a reminder, here is the link back to the introduction and guidelines of this CEO segment.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 1:11 pm in Management Change, Media

Guidelines for Entrenched Corporate Leaders

Wehave compiled a list of very entrenched CEO’s (or Chairmen) that are in whatcould be deemed as an invulnerable position. Some holders or market pundits may have criticized them or even calledfor more oversight or removal, but these leaders are likely fixtures of thecompany whether shareholders like it or not. On companies that are majority owned these companies basically belong tothe leader(s) except on days when there is an annual shareholder meeting or aboard meeting. We are releasing thenames and logic behind the stories on Wednesday, Thursday and Friday of thisweek.

These lists are neverperfect, and this list is open for criticism.  In fact, if you would havesaid in 1998 that Hank Greenberg would be forced out because Eliot Spitzerthrew down the gauntlet and said he refuses to negotiate with the company itwould have seemed a low percentage bet.  It took blatant theft and whatwas going to be an assured conviction to remove Dennis Kozlowski fromTyco.  There are just some corporate figureheads that the company wouldn'tseem the same without.  Ninety-nine percent of America doesn't know the AIG and Tyco management names thattook over.  It usually requires scandal or perpetually consecutive underperformanceand is from obvious management blunders and gaffs before certain managementfigures become at risk.

Keep in mind that this is from a Wall Street perspective.  If you arean employee and have to deal with the wrath of a Chairman or CEO then you areentitled to a far different opinion.  But these names are perhaps the mosttied to the company and when people think of the company they think of thesecorporate leaders.

It is always important to remember that life does go on, even after key CEO’sleave.  Kings pass away or they abdicate, but what is clear in history isthat a successor has to be able to fill the shoes of the predecessor.  Justremoving a figurehead and hoping for the best is often a poor strategy. Most on this list are probably replaceable insome form or fashion, but the stocks probably wouldn’t react well to theirdeparture. Unlike the list of 10 CEO’sthat need to go from December, this list of corporate figureheads either needsto stay or trying to get rid of them would likely yield more grief than reward.

Jon C. Ogg

January 17, 2007

Posted on: January 17, 2007 – 12:36 pm in Management Change

Expected Defense in Level 3 Communications

Level 3 Communications (LVLT) is down over 4% on high volume today after it was cut to Sell at Deutsche Bank in pre-market trading, but its target was raised target to $4.65. This is a head scratcher and it probably won’t be too long before bulls start defending it.  As a reminder this was Cramer’s Top Speculative Pick for 2007, and you can be generally sure that he will not have a change of heart soon enough that he would not be out defending it.  He also named it his best "Under $10 Pick" at the end of 2006.

Other recent analyst calls from the last two weeks: Credit Suisse gave it an outperform rating with a $7.50 target.  J.P.Morgan raised its price target to $8.00 and maintained an overweight rating.  There are other calls on it, but you can expect the vocal bulls in the name to be out discussing this as a gift.  I don’t have any dogs in the fight at all, but I can say that if I was a holder and I saw this research report this morning it would be a head scratcher and would make me wonder the logic behind the call.

This research note is one that will be challenged by the bulls.  The initial call from Deutsche Bank was a Hold back in August when it was much lower, so a downgrade and raised target after a rise?  It sounds like "I was wrong, and now even more wrong."  I can hear Cramer on it now: "What the…. Dumb as a bag of hammers…. Thanks for the nothing call…." and the like.

LVLT is down 4.4% at $6.32, and its 52-week trading range is $3.21 to $6.80.

Jon C. Ogg
January 17, 2007

Posted on: January 17, 2007 – 10:56 am in Analyst Calls, Cramer, Technology Companies, Telecom

Pre-Market Stock Notes (JAN 17, 2007)

(ACN) Accenture noted as positive on IT consulting by Cramer on MAD MONEY.
(APH) Amphenol $0.85 EPS vs $0.82 estimate.
(APSG) Applied Signal found irregularities from options review and will have charges.
(ASML) ASML Holdings trading up 6% after beating earnings overseas and calling for growth in 2007.
(BPOP) Popular $0.20 EPS vs $0.25 estimates.
(CERS) Cerus received French regulatory approval for Intercept.
(CIT) CIT $1.28 EPS vs $1.25e.
(CRDN) Ceradyne received $6 million ceramic body armor order from Marines.
(CVC) Cablevision deemed the revised offer from the Dolans as inadequate.
(EQIX) Equinix said a subpoena over option practices was withdrawn.
(GNVC) Genvec launched malaria trial with navy.
(HMA) Health Management trading up 6%; lowered EPS guidance on bad debt charges; announced recapitalization and special dividend.
(INFY) Infosys noted as positive on IT consulting by Cramer on MAD MONEY.
(INTC) Intel beat estimates, but shares down 4% as margins for the year will remain lower due to price wars.
(JPM) J.P.Morgan $1.09 vs $0.95e; indicated up 1%.
(LEN) Lennar -$1.24 EPS vs -$0.85 estimate.
(LLTC) Linear Tech trading down 3%; met estimates but soft guidance; President is resigning.
(LUV) Southwest Airlines $0.12 EPS vs $0.12e; was $0.09 after items.
(MCD) McDonalds will post $0.48 EPS from operations vs $0.58 estimate but there are items in the number; posted same store sales growth of 6.9% in December; stock up 0.7%.
(MDT) Medtronic announced voluntary suspension of certain external defibrillators.
(MEL) Mellon $0.57 EPS vs $0.57 est.
(NVDA) NVIDIA filed to sell 1.1 million shares.
(RACK) Rackable Systems fell 30% after lowering EPS targets.
(SFN) Spherion raised EPS target but revenues a tad under plan.
(SGR) Shaw Group $0.19 EPS vs $0.20e.
(SIRI/XMSR) Sirius and XM would have an FCC regulatory issue in a potential merger according to WSJ.
(VERT) VerticalNet filed to sell 2.5 million shares for holders.

Posted on: January 17, 2007 – 8:20 am in Pre-Market Activity

Analyst Calls (JAN 17, 2007)

AAPL reiterated Outperform at Piper Jaffray.
ADTN cut to Equal Weight at Lehman.
ALGT started as Buy at Merrill Lynch; started as Peer Perform at Bear Stearns.
ALSK cut to Underweight at Lehman.
APPB started as Underweight at Prudential.
ASML reiterated Buy at Jefferies.
BBG started as Buy at A.G. Edwards.
CBH cut to Sector Perform at CIBC.
CBSH raised to Market Perform at KBW.
CHKP raised to Outperform at Credit Suisse.
CMX cut to Neutral at Prudential.
CNP cut to Hold at Citigroup.
DRI raised to Buy at UBS; started as Overweight at Prudential.
EQ cut to Underweight at Lehman.
FRP cut to Neutral at Oppenheimer.
GHDX cut to Equal Weight at Lehman.
ICE cut to Market Perform at achovia.
IWA cut to Underweight at Lehman.
JNC cut to Hold at A.G.Edwards.
LEE raised to Buy at Deutsche Bank.
LNC raised to Strong Buy at Raymond James.
LVLT cut to Sell but raised target to $4.65 at Deutsche Bank.
MCD started as Neutral at Prudential.
MI cut to Neutral at Merrill Lynch.
MRT started as Overweight at Prudential.
NBIX raised to Overweight at Lehman.
NGG raised to Buy at Merrill Lynch.
NT reiterated Buy and target raised to $33 at Jefferies.
OMI raised to Outperform at Credit Suisse.
OMTR cut to Equal Weight at Morgan Stanley.
PFCB started as Underweight at Prudential.
PFE reiterated Buy and target raised to $30 from $28 at Deutsche Bank.
PFWD cut to Market Perform at Raymond James.
PG raised to Buy at Goldman Sachs.
PRGO started as Buy at Merrill Lynch.
RARE started as Neutral at Prudential.
SBUX started as Neutral at Prudential.
SYMC cut to Neutral at Credit Suisse.
TEF cut to Reduce at UBS.
TIBX started as Outperform at JMP Securities.
UNH reiterated Sector Outperform at CIBC.
USIH cut to Neutral at Oppenheimer.
UST cut to Neutral at UBS.
WEN started as Underweight at Prudential.
WRLD cut to Hold at Jefferies.
WY cut to Neutral at UBS.
YUM started as Neutral at Prudential.

Intel (INTC): A.G. Edwards reiterated Buy and maintained $24 target.  Deutsche Bank lowered target from $25 to $26, maintained Buy. Citigroup lowered estimates on margins but maintained Buy.  Jefferies reiterated Buy.  Maintained Neutral at J.P.Morgan.

Heelys quiet period ended: Started as Sector Perform at CIBC; started as Outperform at Bear Stearns; started as Overweight at J.P.Morgan.

Posted on: January 17, 2007 – 8:18 am in Analyst Calls

Are Sirius And XM Worth Less Than Their Stock Prices?

JP Morgan upgraded both Sirius (SIRI) and XM (XMSR) saying that both could have close to 15 million subscribers by 2010. The research note also indicated that most cars may have one of the services pre-installed within the next few years. Oddly enough, Bank of America downgraded XM saying the stock might not move above $19 in a merger with SIRI.

After trading at $4.10 the previous day, the upgrade only moved Sirius to a close of $4.15. XM, which had traded at $17.12 before the analyst calls, closed at $17.11 the days that the research notes were released.

No amount of good news seems to move the stocks. That includes recent statements about year-end subscriber figures and forecasts of positive cash flow in Q4. Both stocks have rallied slightly, but are still far below their 52-week highs.

More than one analyst has made the case the Sirius is worth less than its current price. Morningstar has a "fair value estimate" of  $1.50 on the stock, even assuming that it sales increase 53% a year over the next five years. Thomson/First Call has price target for Sirius from 18 analysts. These range as low as $3.50, well below the current share price.

XM also may not be worth more than the current stock price. Some analysis puts the value of the company at $18. Morningstar’s "fair value estimate" for XMSR is $12. The low end of the range of price from 17 brokers surveyed by Thomson/First Call is $11.

Most valuations of the two companies now take into account a potential merger of the companies which could save hundreds of millions of dollars. This might well make the combined entity profitable and help pay down the large debt load from both companies. But, there is concern that the Justice Department and FCC might block such a deal.

If the merger does not come about, the stock may well fall as concerns continue that operating results cannot out-race debt service.

A lot of good news and stock prices that are still low. Perhaps the companies are worth less than the market’s hope for them.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 17, 2007 – 7:45 am in Satellite

Europe Markets 1/17/2007 GlaxoSmithKline, Bayer Up, Reuters Down

Stocks:  (BCS)(BP)(BT)(GSK)(PUK)(RTRSY)(UN)(VOD)(BAY)(DCX)(DB)(DT)(SI)(ALU)(AXA)(FTE)(V)

Markets in Europe were narrowly mixed at 6.45 AM New York time.

The FTSE was down .1% to 6,211. Barclays was down .8% to 749. BP was down 1% to 535.5. BT was up .5% to 313.25. GlaxoSmithKline was up 1.5% to 1409. Prudential was up .2% to 720.5. Reuters was down 1.3% to 444.25. Unilever was up .6% to 1421. Vodafone was up .7% to 149.75.

The DAXX was up .1% to 6,722. Bayer was up 2.1% to 43.78. Daimler was flat at 46.7. DeutscheBank was flat at 104.13. Deutsche Telekom was down .3% to 14.71  Siemens was up 1% to 78.49.

The CAC 40 was up at fraction a 5,592. Alcatel-Lucent was up 1.7% to 11.58. AXA was down .3% to 32.53. France Telecom was flat at 22.16. ST Micro was down .9% to 14.76. Vivendi was down .6% to 31.81.

Data from Reuters.

Douglas A. McIntyre

Posted on: January 17, 2007 – 6:47 am in International Markets

If You Can’t Beat Them, Pay Them

Google (GOOG) CheckOut does not seem to have taken much business from Ebay’s (EBAY) PayPal. At least not according to a look at the Ebay 10-Q.

But, Google, always one to pull out all of the stops, is running a promotion on its homepage, which gets over a zillion pageviews a day. The deal. Use CheckOut and get a $10 bonus when purchasing goods and services from a number of sites. These merchants include Starbucks (SBUX), ToysRus, Petco, and Ace.

The move could actually take some share from PayPal because of the huge exposure that the program gets on the Google homepage and the large amount of money that it would appear that Google is willing to spend.

With PayPal as one of the cornerstones of Ebay’s success, it isn’t good news for the online auction company.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 17, 2007 – 5:40 am in Internet

New Search Engine Could Take Share

The latest search engine, WikiSeek, may actually have a chance to take some small amount of share from Google, Yahoo!, Microsoft, AOL, and Ask.com. The product searches data from the gigantic Wikipedia database. Wikipediea is one of the largest websites in the world, often ranking in the top 15 sites in terms of visitors.

The edge the new search site may have is that it also searches data from all websites referenced at Wikipedia, which could easily stretch into the million.

The site was built by development company SearchMe which claims that "providing suggested search refinements based on user tagging and categorization within Wikipedia, making results more relevant than conventional search engines"

The search space is fiercely competitive, and the smaller players which include Microsoft (MSFT), AOL (TWX) and Ask,com (IACI) are already losing share to Yahoo! (YHOO)and Google (GOOG)

If a new player could take even 2% or 3% of the market, it could disrupt the businesses for several web portals.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 17, 2007 – 5:21 am in Internet